How to Track Marketing Impact of Radio and TV Marketing Part I
Published: 10/20/2022
Radio Marketing Measurement
An effective way to measure ROAS (Revenue/ad spend) is to examine “early returns” for the potential impact of radio ads. For example, we can explore the following:
You have increased search volume. If a radio spot has had a material effect, you can expect an increase in search engine volume around specific keywords from your ad. Alembic detects keywords for both on-sight search as well as search automatically.
You increased site traffic. Along with a higher search volume, you should also see increased traffic from sources and to pages on your website. Alembic automatically detects these changes.
Higher-quality traffic. As more visitors come to your site because of your ad, you’ll likely see a corresponding increase in highlighted traffic, such as blog posts, white papers, or store items. These new visitors come with high interest and purchase intent and will likely drive conversions. Alembic will automatically detect higher-quality traffic and corresponding conversions.
They increased site visits to conversion rate. You’ll likely see more visitors become leads and eventually paying customers. Alembic will automatically detect conversions and provide a 90-day forecast.
Alembic’s Event Correlation Detection engine (ECD) can correlate all “early returns” together to demonstrate the material impact that your radio ad has on your business. Check out our product.
Radio lets people know who you are; they will search for your brand name and visit your website leading to more organic and paid hits and increasing your cost per click. Ultimately, you’ll have more people visiting your site, and you’ll get more conversions. Alembic tracks these outliers and correlates them with your brand’s “mentions” to determine the effectiveness of Radio advertisement on your business.
Alembic creates a baseline model of what Detections, Conversion, and Transactions (sales) look like without any influence from radio advertising. Then, as an example, correlate detected events, spikes in pages, searches, transactions, and other key performance indicators. The correlations revealed the effects on the business when ads were run against the equivalent periods when ads were not run—providing a good idea of how effective your ads were for the listening period.
Radio Valuation
Audience Size
Radio ad pricing varies wildly, depending on how many people listen. The pricing for a radio ad finally comes down to the following equation:
Number of People Listening x Cost to Reach 1,000 Listeners (CPM) = Cost of Advertising per Spot.
Based on Google Search: What is the daytime radio average CPM? The average daytime CPM rate is typically in the $12 to $16 range for adults between 18 and 49. Audiences that listen to the broadcast are older than 50, and a CPM of $8 to $12 is reasonable for daytime. The evening and particularly overnight should be lower.
NOTE: Alembic could provide a generalized value of $10 to $14 CPM for daytime. We would need to track daytime vs. nighttime “mentions .”Alembics algorithm could be:
VPA-Visits Per Airing™ is our proprietary metric for evaluating response on a per-airing basis for aired ad spots. It provides a true ‘apples-to-apples’ comparison of ad spots, dayparts, and days of the week, considering frequency, allowing an accurate comparison between a site that aired 25 times and a place that aired 100 times.
VPD-Visits Per Download™ is our proprietary metric for evaluating responses to Podcast ads, whether dynamically inserted impression-based ads or baked-in static ads. It provides an actual ‘apples-to-apples’ comparison of podcasts, episodes, downloads, dayparts, and days of the week, considering frequency, allowing an accurate comparison between an ad that aired 25 times and an ad that aired 100 times.
Additionally, they talk about:
Using an 8 Minute Attribution window for optimization and Hourly, Weekly, Monthly, and Yearly (or any date range) for ad campaign impact and directional insights using a correlation coefficient methodology.
80% probability that website traffic increased within the first 8 minutes because of a broadcast ad
Our success metric is VPA–Visits per Airing™ or VPD–Visits per Download™ (for podcast attribution) – providing directional insights for ad creative, ad length, ad schedule, day, daypart, station, station format, and programming.
Our Attribution is easy to understand – A bigger VPA is best! That’s it! No data degree is required.
We use Estimated Daily Website Traffic for simple daily Attribution and Google Analytics or Adobe Analytics for granular ‘by the minute’ Attribution.
Advertisers can independently verify attribution data by looking at their website traffic totals in a given date range.
We are OK knowing that Attribution is not 100% and offers full Attribution and data transparency.
The founders were advertisers and tried to track the impact of radio broadcasts to prove it didn’t work (wink wink they found out they do).
General Discussion of Valuation models and Definitions
CPM for Broadcasting
The best way to get an accurate CPM for a television advertisement is to know how good the ratings are of the television show with which your ad plays. Nielsen ratings are the gold standard for estimating the popularity of a television show. According to the Museum of Broadcast Communications, the average for a network series is 11 percent of the television-owning American population, which is estimated to be 94 million households. That means a show with ratings of 11 percent reaches 10.3 million people. The more popular a display is, the more expensive advertising will be. A less-expensive example would be a show seen by 5 million people.
Some figures:
According to Nielsen’s National Television Household Universe Estimates, there are 120.6 million T.V. homes in the U.S. for the 2019-20 T.V. season.
The number of persons age two and older in U.S. T.V. Households is estimated to be 307.3 million, representing a 0.6% increase from last year.
Additionally, the percentage of total U.S. homes with televisions receiving traditional T.V. signals via over-the-air, cable, DBS, or Telco, or via a broadband Internet connection connected to a T.V. set is currently at 96.1%. That’s an increase of 0.2 percentage points from the 95.9% estimated last year for 2019.
According to estimates, there are 122.4 million T.V. homes in the United States for the 2021-2022 T.V. season. While the number of T.V. households continues to grow, pay T.V. is becoming less popular – the pay T.V. penetration rate in the U.S. was pegged at 71 percent in 2021, marking a drop of over 10 percent in just five years.
The Equation
If your ad is featured next to an average television show that garners 5 million viewers, then you can use that figure to determine your CPM when you compare it to the price of advertising. First, divide the viewer number by 1,000 to calculate the cost of one thousand viewers. The amount you are working with now is 5,000. If you buy a single thirty-second advertising slot for $10,000, divide that price by 5,000 for a CPM of $2. The cost per 1,000 people if you buy $10,000 of ad time during a show that gets 5 million viewers.
Alembic should be able to use this as a rule-of-thumb for T.V.:
average monthly tv spend/(Avg viewership/1000) = CPM for TV
Assumptions:
All markets around the world use the same value.
The customer knows their average monthly T.V. spend
The valuation model accepts inputs for avg monthly tv spend, and avg viewership OR avg viewership is based on “mentions,” and the equation becomes:
avg monthly tv spend/mentions = Cost Per Mention (new alembic term)
Upfront Market and CPM
Once a year, typically in May, networks sell advertising slots for the upcoming television season at what is known as the upfront market. You are taking a chance by buying bulk for a network that will be testing out new series in the fall, but there are often some guarantees. If a network fails to attract the ratings they promise advertisers; they run free commercials to compensate for it.
NOTE: Larger customers will be able to provide Alembic with the Upfront market spend that we can use in the equation.
Gross Rating Point Definition
A gross rating point is the total of all weekly rating points for a given schedule of advertisements. It represents the total number of U.S. households participating in Nielsen ratings to determine the total viewership of television programs. A single rating point represents 1 percent of the full participants. According to the Nielsen website, as of the 2019-2020 season, the total number of households participating in Nielsen TV ratings was 120.6 million. This makes a single ratings point equal to 1,206,000 homes.
NOTE: Alembic could use the Nielsen rating from the API (provided that it is available) to calculate average monthly tv spend/(Avg viewership/1000) = CPM for T.V. using this method, the avg viewership would come from the Nielsen API each week and thus we would have:
average monthly tv spend / (Nielsen rating/mentions) = weekly CPM for TV
Importance of GRP
Advertisers and marketers use GRP to measure the impact of given advertisements. The more rating points programs earn, the more television viewers have the potential to view the advertisements or promotional spots. This makes securing advertising time on popular television shows desirable for large and small companies across the country. Television networks recognize the desirability of advertising on these programs and charge advertising rates by programming popularity. This is how 30 seconds’ worth of advertising time can cost millions of dollars depending on total weekly viewership.
NOTE: Alembic could create a sliding average based on Neilsen viewership for the average cost of a point. (mentions point – Alembic term) that would provide additional accuracy. It needs to be thought through more.
Calculating Gross Rating Point
Calculating GRP requires an advertiser to know the total market percentage a given promotion reaches and how many times that promotion runs on a given television network. According to MarketingProfs, a marketing advice website, a marketer multiples the percentage of total market exposure by the number of exposures in a week to determine GRP for that promotion. For example, an advertisement reaching 20 percent of the market with a total weekly exposure of five has a GRP of 100.
NOTE: The higher the GRP, the better. If Alembic had something along these lines, our customers would be able to understand the metric without effort.
Impact of GRP
The impact of GRP on a marketing campaign is deceptive. A high rating may indicate that a more significant number of consumers are viewing a company’s advertisements, but these views don’t necessarily make an advertising campaign successful. Alembic’s advantage is that we correlate the high GRP to Social media, Web traffic, and transactions. Thus, Alembics ECD theoretically can provide insight into whether or not a promotional campaign is successful.
NOTE: Creating a single value metric such as GRP would allow Alembic to provide a leading indicator of campaign success. GRP + transaction + social + web + media detections can help a company determine if a high GRP is helping the company or if the firm’s marketing department needs to develop new strategies for reaching the right consumers. For example, researching what T.V. programs a company’s customers watch can help the business redirect advertising to the more fertile territory.
Conclusion
Companies across the world including Alembic are trying to find ways of measuring ROI on various forms of media, these models and valuations will change over time as consumer behavior and data change too. We hope that this wasn’t another boring industry blurb on measurement. In Part II we explore how to track and evaluate the rising popularity of podcast marketing.
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